Cisco (CSCO)

Not an expensive stock. On the switching side, they’ve not been able to get that to grow more aggressively which has really hurt them. They’ve augmented the slower growth by making acquisitions and buying assorted things. Now they are going to get squeezed on the margin side. The numbers are going to be OK numbers, but you can put your money in other places and do better. Over the next couple of years, you may get some margin compression, as their switching business is just not running on all cylinders.

Cisco Systems (CSCO-Q) or Intel (INTC-Q)? Both are old economy tech stocks, and both are excellent companies. If he had to choose, he would choose Intel, which has done more to turn the corner.

Technology tends to do well from October through to January, so we have just exited the period of seasonal strength where the stock gains about 25% on average. We are out of the period of seasonal strength, and currently are in a period of seasonal weakness, which runs through until about mid April. Technically, this has run up with the broad market, and all the indicators on his screen indicate that it is vastly overbought. Wait until it comes back down to some of the major moving averages, the 20 day at $32.89, the 50 day at $31.34. Start looking for your entry point at about mid-March through to mid-April.

He likes this a lot. It has had a nice run this year and is up close to 20% in the last 2 months. They make networking gear. Free cash flow yield of about 8%. A very profitable company. As long as people keep using smart phones and in general transferring data, this company is going to make a lot of money, and there are not a lot of competitors.

It has a 3.4% yield. He likes it. On a seasonal basis technology may take a breather here. As we connect more and more devices up to the cloud this one should benefit. Trump may focus on building out the digital infrastructure in the states. He thinks they will be well placed going forward as we move from the world of analogue to digital. They are executing so you won’t lose any sleep over it. (Analysts’ target: $35.00).

They are a big beneficiary of the Internet. He does not following it. He would not buy it here. But he does believe in the Internet and more and more smart devices.

It has had to transition from hardware into services. They have done a pretty decent job. They offer cloud services and security services. It has a decent dividend yield and is fairly defensive for the IT world. 3.4% dividend.

One of the old-school technology names and people are looking at the true obvious Cloud players. This company is going to be more and more important in Cloud infrastructure than what people are giving it credit for. From about 2000 to 2015, this made zero, and finally you are seeing some break out.

They’ve done everything right. Continue to buy back their stock and manage their balance sheet effectively and efficiently. Net profit is 20%, EPS is 12%, income growth is 19%, total debt is only 35.4, Price to Book 2.4%, and ROE is close to 18%. However, you don’t need to be in the hardware manufacturing component. It just continues to be commoditized. You want to be more on the software side. He sold his holdings.

It is one of her higher holdings. It has been a bit of a show-me story. They have been really good at disrupting themselves and getting into new technologies. They have done well on the gross margin side. She thinks their shares will continue to climb higher. There is quite a bit of room to go.

On his radar screen, because it has a growth outlook to its earnings. A very high quality business. It has capital abroad that could be repatriated. The valuation is very, very reasonable at about 12.5X 2017 earnings.

A name that he likes. The industry leader. It is huge. Trading at a very reasonable valuation of about 13.5-14 times earnings. Earnings growth has been at the lower end, 2%-5% a year. Roughly 30% of the market cap is sitting in cash. If you X that out, you are looking at a 10X valuation, and he doesn’t think the market has put much on that. If repatriation for US companies happens, you are going to see some dividend increases and increased share buyback.

(A Top Pick Nov 6/15. Up 10.89%.) He still likes this. The growth is there and it is going to come. You get a good yield while you wait. It will give you a 10% return.

They have a massive balance sheet, $27 billion in cash, right now, but it is all held overseas. 3.3% dividend yield. The major player in the Internet of Things. They dominate the router and switches space. If Trump is able to get a tax holiday, where companies can repatriate cash, that is going to be a massive windfall for this company. Their balance sheet is AA rated. They have enough buying power to do acquisitions and navigate through the storm. The wave of the Internet of Things is real, and this is a key player.

Not when you think of tech stocks anymore. Trading at 12X earnings. Great dividend yield of 3.4%. The router business has been a much more difficult time for them, and he thinks they are going to grow slowly. They have some good growth coming over the next couple of years. Made a few small acquisitions which is really going to help them out in the future.